Sunday, August 16, 2009

More lies

Japan have had an economic downturn since 1990 and during time, until now, the Japanese governments have been throwing stimulus after stimulus after stimulus into the fierily hell of stupidity and kept interest rates down near zero for the better part of a decade. The only thing that have kept them floating have been trade and the Japanese people that work hard and still save money. Now it is reported that Japan, after four consecutive quarters of contraction, has a “growing” economy since it “grew” by 0.9% in the April-to-June quarter. Cornflake economists and robot journalists immediately took this as another sign that the recession is over referring to Germany and France that last week had positive (fictive) growth numbers. Some investors and other correspondents say that the rise is due to a huge government stimulus package and it is unclear whether the momentum will be sustained. Massive government stimulus measures helped - measured as about 0.7% of the growth by economist which means, of course, that the real number is higher - to boost the economy, including cash handouts and subsidies to buy energy efficient cars and home appliances. The second reason is that manufacturers benefited from recovering demand in mainly China (demand also thanks to stimuli).

As mentioned in this earlier post the supposedly “growth” in Germany and France was a lie, and so is Japans. This because of what I have said before and will say again, GDP is a very stupid way of measuring wealth and how the economy is really doing. Anyone with the slightest knowledge can increase GDP with 10% without even trying. All you need to do is hire all people that is unemployed to tare down houses and rebuild them again or, even funnier, have them dig holes in the ground and refill it again, over and over. Best way of doing this, of course, is to borrow hundreds of billions to pay for the scam. And for a government under fire things like typhoons, earthquakes and massive fires are fantastic news since all those things also increase GDP. People dying? Pffff… Real wealth creation? Pffff… GDP is what matters.

In the real world Japan, as most other countries, is doing terrible at the moment. Both Japan and China will end up on the other side of the tunnel after this depression as winners since their capacity to actually produce is higher than most other countries, but for now and the near future their “growth” is not good news, in fact its bad news. This for two reasons. Firstly its not real wealth that has been created, only higher GDP numbers, secondly, and most importantly, this sends out a signal that the stimulus’s and bail-outs are “working” hence more of the same madness is to come.

Wealth comes from us producing things, not from governments throwing billions around. Wealth comes from producing, not from bailing out companies that should go bankrupt. Until either the people realize this and rebel or our leaders realize this and do the right thing this depression will never be over. There might be a year or two of recovering now and again, but sooner or later, the next recession will hit, and then the next and the next. In our current situation, however, there is no recovery for a long time yet, at least not for the US and the UK that are in terrible conditions. And when the second wave of this depression tsunami wave hits US, it will have effect on the entire world. In other words, don’t trust anything you are being told. It is all a lie.

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